It’s a cut-throat war for same-day delivery service this shopping season

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Same-day service is the new buzzword for online retailers, and it could become a popular option for consumers during the holiday season. Retailers are presumably hoping they’ve learned something from companies that went before them like Kozmo (paywall), a web courier that promised deliveries within an hour, but failed in 2001 after sucking up $250 million in venture-capital funding.

Amazon has been testing a same-day service for in a few US cities since 2009, and now many other retailers are trying to compete. eBay is offering a same day service called eBay Now for purchases made on their iPhone app by customers in San Francisco and New York, and the company is planning to expand the program. Walmart is offering a same-day service through the holidays called Walmart To Go.

The calculations in the Wall Street Journalof one recent purchase illustrate why same-day service has a long way to go before it is a viable business venture. The newspaper describes how on a recent evening in San Francisco a $21 baking pan was purchased by an eBay employee at Macy’s and hand delivered to a customer who paid just $10 for the whole transaction.

But competition is still fierce in the yet unproven sector of same-day service, and for now profits are beside the point. The Journal writes:

Driving this proliferation is the desire to give consumers instant gratification with their online orders to drive sales, as well as giving customers another incentive to skip lines at their local retailer. Many of the companies are hoping to compete with Amazon, which has built a reputation for speedy, low-cost deliveries through its network of sprawling warehouses.

The Atlantic Wire warns the service can’t last, but meanwhile Time points out that it’s cheaper and easier to let someone buy the good for you rather than buying it yourself. “Once the cost of mileage and parking are factored in, it’s arguably cheaper to order goods online with same-day delivery than to go out and retrieve them oneself.”